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Shell PLC recorded its first net corporate taxes paid in the UK in at least four years, following the implementation of an oil and gas windfall levy by the government, Bloomberg reported on Monday.
From 2018 to 2021, Shell had received UK tax credits for North Sea investment expenses and the decommissioning of aging platforms. In 2022, Bloomberg reported that Shell paid $40.5 million in tax on $1.81 billion in UK profit as a result of the new Energy Profits Levy.
Back in January this year, Shell had warned investors it would end up paying some $2 billion in the UK and the European Union due to windfall taxes based on soaring global profits, the BBC reported.
Globally, Shell saw 2022 profits of $64.8 billion, compared to corporate income tax payments of $13.1 billion. The year prior, Shell paid only $6 billion in corporate taxes on profit of $30 billion.
The global profit for the London-listed energy giant in 2022 amounted to $64.8 billion, with corporate income tax payments totaling $13.1 billion. This marked a significant increase from the $6 billion in corporate taxes paid in 2021 on a profit of $30 billion.
By way of comparison, in Norway, Europe’s other North Sea oil giant, Bloomberg said Shell paid $2.12 billion in corporate income tax on $3.85 billion in profits—a high tax bill that came second only to the $4.56 billion it paid to Oman.
The UK’s windfall tax on energy profits was introduced in May 2022 and is set to remain in force until 2028.
In the first quarter of this year, Harbour Energy, the biggest producer in the UK North Sea, warned that the country’s windfall tax would wipe out its profit surge entirely, forcing it to cut jobs and investments, though it simultaneously unveiled some $1 billion in shareholder payouts, according to the Guardian.
In mid-November, Harbour said its pre-tax profits had risen by nearly 700% in 2022, largely on the tailwinds of Russia’s invasion of Ukraine. So far, Harbour, according to Bloomberg, has paid $205 million in UK windfall taxes since their implementation.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com